Manager to launch senior fund and vehicle targeting higher LTV levels
Henderson is launching two debt funds with different investing strategies. The institutional fund manager is talking to cornerstone investors about a fund to target senior debt and another that will invest in senior and “defensive subordinated secured debt”.
Henderson is one of at least 10 managers to announce plans for senior debt funds so far this year as investor interest in property debt increases. Its Senior Secured Real Estate Debt Fund will invest in senior ranking, conservatively struc-tured loans at up to 60% loan- to-value levels, said head of real estate debt John Feeney.
The fund will target 5-6% gross returns over an up-to seven-year investment period. Its second product, the High Income Real Estate Debt Fund, will also target loans secured by high-quality leased property, but at up to 75% loan-to-value levels and will target higher gross returns of 8-10%.
Feeney said: “This product is ‘institutionalising’ fast. We have had feedback from German real estate investors, among others, who are attracted to the senior debt strategy and 5-6% return, which fits their expectations.”
Stressing that fund raising had recently got under way, he added: “On the senior debt side, we feel we may have success both with raising a pooled fund and segregated mandates.”
Each fund will be run separately and the two will not invest in the same deals. Henderson’s team includes secured credit head Colin Fleury and Ed Chai, who previously worked in real estate at Citigroup.
Due diligence on property assets will be the responsibility of Marcus Langlands Pearse, after Andrew Creighton resigned this month.
Feeney said that with banks’ lending ability remaining constrained, debt funds “have an important part to play in most big financings. It will be an unusual club that does not include an insurance company or fund. The market needs all the new money it can get.”